Author Moore Australia

Preparing a business for sale: Planning for the transfer of generational wealth

Selling a business isn’t just a financial decision, it can be a deeply personal one, especially when it involves passing wealth on to the next generation. For many business owners, the sale of a business represents the single largest financial event of their lifetime. That’s why it’s essential to approach it with a long-term lens.  One that includes careful planning around generational wealth transfer.

What is the transfer of generational wealth?

The transfer of generational wealth refers to the strategic passing of assets such as business sale proceeds, property, shares, or trusts, from one generation to the next. It’s about ensuring that the financial legacy you’ve built continues to benefit your family into the future, with optimal tax implications and maximum protection.

Why plan for this before a business sale?

After the business is sold, the structure of ownership changes and your ability to transfer the assets tax-efficiently, may be limited. Planning this ahead of a business sale gives you options, such as:

  • Structuring ownership or shareholdings in a family trust or holding company.
  • Gifting or transferring equity before the sale event.
  • Reducing exposure to capital gains or estate taxes.
  • Aligning the sale proceeds with your broader estate planning goals.

Having a strategy in place before the sale transaction ensures that you don’t miss valuable opportunities to preserve and grow the family wealth.

When is the best time to discuss and plan for the wealth transfer?

Ideally, 12–24 months before the planned sale. This allows enough time to:

  • Engage with advisers (legal, tax, financial, succession).
  • Restructure ownership if necessary.
  • Communicate intentions with the impacted family members.
  • Build a plan that supports both the sale and long-term family objectives.

Delaying these conversations until after the sale can result in missed planning opportunities, unnecessary tax liabilities, or even family conflict.

Key tax considerations for business owners

Intergenerational wealth transfers are a growing focus for the Australian Taxation Office (ATO).  While we don’t have a formal inheritance or estate tax in Australia, there are several tax considerations that require consideration in preparation for any significant changes including:

  • GST on Business Sale – while GST may not apply to the sale of a going concern, it’s critical to ensure the transaction meets the ATO’s criteria.  If not structured correctly, GST could be triggered on the sale of business assets, especially where property or equipment is involved.
  • Transfer Duty (Stamp Duty) – transfer duty may apply to the transfer of business assets, intellectual property (like brand names) land, , or, in limited cases, shares in a company.  Planning ahead can help minimise or defer this cost, particularly when transferring assets to family trusts or related entities.
  • Capital Gains Tax (CGT) – transfers of assets (including property, shares or business interests) can trigger a CGT event even when no money changes hands.  Pre-CGT Assets acquired before 20 September 1985 are generally exempt from CGT. However, changes in beneficial ownership or restructuring (e.g., moving assets into a trust) may affect their status. Documenting the history and cost base of these assets is essential.
  • Small business CGT concessions – families often rely on these concessions to transfer business assets tax effectively however they require the satisfaction of various tests and if applied incorrectly, can create upfront and future tax issues.
  • Division 7A – transferring wealth through private family-owned investment or operating companies can trigger deemed dividends, as can the forgiveness of debts owed by family members. 
  • Superannuation and Death Benefits Tax – superannuation balances are not automatically tax-free when passed to adult children.  If part of the business sale proceeds are contributed to super, consider the tax treatment of future withdrawals or death benefit payments.
  • Testamentary Trusts – these trusts can be established via a will and activated upon death. They offer flexibility in distributing income to beneficiaries (including minors) and can provide tax advantages compared to direct inheritance. However, they must be carefully drafted to comply with tax laws.
  • Business Restructuring Risks – restructuring a business before sale (e.g., moving assets into a holding company or trust) can trigger unintended tax consequences if not done properly. Consider roll-over relief options and ensure compliance with Part IVA anti-avoidance provisions.
  • Timing and Documentation – the timing of asset transfers, whether gradual or immediate—can significantly impact tax outcomes. Ensure all changes are well-documented, including valuations, acquisition dates, and cost bases. This supports future tax reporting and helps avoid disputes.
  • Trust distributions and Section 100A – family trusts are often a key vehicle for intergenerational wealth transfers but are subject to complex anti-avoidance rules.
  • Compliance, disclosure and record-keeping – as private groups continue to be under the ATO microscope, evidence that substantiates what has occurred will provide support should any disputes arise (with the ATO or family members) as well as providing vital information for the next generation (i.e., cost bases, acquisition dates, settlement information etc.).  The ATO has recently released guidance on succession planning and the implications for tax governance frameworks.  For larger groups, particularly within the ATO’s Next 5,000 review scope, it will be important that tax governance frameworks are documented and, based on the ATO recent guidance, encompasses tax risks associated with succession planning. ​

Other key considerations for business owners

When preparing for the sale of a business, it’s important to consider more than just the financial transaction.

  • Clear family communication is essential to avoid misunderstandings and future disputes, especially when heirs are involved.
  • Succession planning should also be addressed early deciding whether a family member will continue in the business or exit entirely.
  • Protecting the sale proceeds through sound asset protection strategies can safeguard against future legal or relationship risks.
  • For some families, philanthropy plays a role, with a portion of proceeds directed toward charitable giving.

Any plan should align with your personal goals for lifestyle and retirement, ensuring financial independence and peace of mind in the next chapter.

Consult a Moore Advisor

Preparing a business for sale is more than just getting the numbers right, it’s about securing your legacy. By planning early and considering how the wealth generated from the sale will flow to the next generation, you can make the most of this milestone and set your family up for long-term success.

If you’re starting to think about selling your business and want to explore your options for wealth transfer, let us help you to build the right plan.